Analysis: Apple's iPhone Is a Revolution for the Few

Apple shot for the ultimate high end with its iPhone announcement Tuesday, loading in radical new features that other phone manufacturers will be racing to catch up with.

And they'll have room to race, because the iPhone is priced so high that only true fans will be able to afford one, and only Cingular Wireless customers will be able to buy it. That will prevent Apple from dominating the smart phone market the way it has the MP3 player market.

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The iPhone is much higher-end than I thought it would be: It has not only GSM, EDGE, and Bluetooth (and notably, not one of the 3G high-speed cellular networks) but Wi-Fi and a gigantic, super-high-res touch screen.

It surfs the Web with a desktop-quality browser and gets push e-mail — but notice that it's personal Yahoo! e-mail, not corporate e-mail, and there's no solution for editing document attachments. This is a consumer phone, not a business phone.

But high-end smartphones like this are only a sliver of the U.S. market, and most of them are sold to business customers, not to consumers.

If Apple hopes to sweep the nation, it'll be banking on its famed usability and brand identity to push this costly device (one of the most expensive phones I've ever seen, even with a two-year contract) forward.

The interface looks a lot like an iPod, and a lot like OS X. This is good — great, in fact — because cell-phone interfaces have needed an overhaul for years.

Many phones today are based either on ancient OSes developed before mobile media, or picky PDA operating systems designed to be tapped with a stylus.

The iPhone's elegant scrolling and big buttons take smartphone applications and get rid of the need for a stylus.

Apple aims to solve the famous problem of cell-phone usability with an all-touchscreen interface that you can tap with your finger rather than a stylus.

Americans haven't taken to all-touchscreen phones before because of the lack of tactile feedback proving that you've pressed a button, and the unattractive "screen grease" look that results from pressing your cheek to a touchscreen.

But touch-screen phones like the Motorola MING have been wildly popular in Asia, where people tend to draw Chinese and Japanese characters on their phones with their fingers.

Among the iPhone's many innovations is "multitouch"—an interface where you can, say, pinch things on the screen with two fingers and drag your fingers apart to make the items bigger.

It's just one of many radical, intuitive elements in this phone that I hope other manufacturers will copy.

I'm not quite sure what to make of Jobs' announcement that the iPhone runs "OS X," because clearly it doesn't: It runs a new, handheld operating system with OS X-like elements.

I can't figure out how, or if, third-party developers can build additional software for this phone, including the Dashboard-like widgets Jobs was showing off.

This is the "OS X Mini" that T-Mobile CEO Robert Dotson spoke about a few months ago — so it's sad that his forward-looking wireless carrier won't be able to use the phone he envisioned.

That leads into the iPhone's two potential Achilles heels.

First, it's locked to Cingular. Apple may have decided to revolutionize mobile technology, but they're sticking with the same old, tired, exclusionary, carrier-locked business model.

Americans don't typically change carriers for individual phones, because carriers' coverage and rate plans vary so sharply, and people buy for coverage first.

Making the iPhone a Cingular exclusive locks out more than 100 million wireless users who prefer Verizon Wireless's network, Sprint's prices or T-Mobile's customer service.

Case in point: One Mac-friendly PC Magazine editor I know said, "Damn Verizon to hell!" when I mentioned the iPhone to him.

Translation: He wants the iPhone. He needs the iPhone. But he isn't willing to give up Verizon's superior coverage in New York City for it, and I don't think many other people will, either.

That's a deep disappointment, because the concept of the "unlocked phone" is now starting to spread in the U.S., thanks to a recent Copyright Office ruling.

Unlocking phones puts power in the hands of manufacturers and consumers, and may give carriers less of a say over phones' software and features. I would have thought Steve Jobs would have embraced that trend.

Apple's associations with Google and Yahoo! do speak to a shift in the balance of power in the cell-phone industry, though.

Typically, when manufacturers make agreements with content companies, the U.S. cellular carriers wipe the slate clean, ignore the agreements and load their own software onto the phones. It's an obnoxious bit of power-playing that reduces consumers' choices.

It looks like Apple's Google and Yahoo! software will make it onto Apple's phones, which may embolden both Motorola and Nokia to demand their own Google and Yahoo! relationships remain intact as well.

Second, the name. Cisco made it clear that it owns the trademark to the name "iPhone," and used that name recently to release a line of relatively nondescript VOIP handsets.

Did Apple pay it off, or are there some lawsuits coming up?

Apple vs. the World

What does this mean for everyone else in the industry? Not all that much, really. Apple is trying to invent a new niche: the consumer smartphone.

It's something Motorola, Samsung and T-Mobile have stabbed at somewhat with the Q, Blackjack and Dash, but those are serious power-user products; this hopes to replace an iPod as a consumer accessory.

Existing smartphone vendors and operating system developers are mostly focused on either the enterprise market or intense e-mailers/text messagers.

The iPhone isn't: It's a multimedia/Web access device.

Apple also isn't playing in the mass market here, the millions of people who don't want to spend more than $100 for a cell phone. This is a niche product, a revolution for the few.

Hopefully, the innovations seen here will spread over the next few years so more people can enjoy them.